“North America revenue increased 18% following our rapid deployment of
idle hydraulic fracturing capacity as land activity further accelerated
during the second quarter, partially offset by further weakness offshore
in the US Gulf of Mexico. In US land, revenue grew 42% sequentially, a
rate almost double that of the 23% increase in land rig count, driven
primarily by hydraulic fracturing revenue that grew 68% as completions
activity intensified and pricing continued to improve. Directional
drilling revenue in US land was also higher as longer laterals requiring
rotary steerable systems and advanced drillbit technologies continued to
drive drilling intensity. Despite the significant costs associated with
reactivating equipment, all of our US land product lines were profitable
in the second quarter, driven by higher pricing, market share gains,
improved operational efficiency, timely resource additions, and
proactive supply chain management.

“In the international markets, revenue increased 4% sequentially, led by
Europe/CIS/Africa as activity recovered from the winter slowdown in
Russia and the North Sea. Latin America revenue increased due to higher
reservoir characterization and drilling activities in the Mexico &
Central America GeoMarket, as well as from increased unconventional land
activity in Argentina. The Middle East & Asia Area benefited from a
seasonal rebound in China, increased activities in Southeast Asia, and
higher Integrated Drilling Services (IDS) activity in Iraq.

“Among the business segments, growth in the second quarter was led by
the Production and Drilling Groups, where revenue increased sequentially
by 14% and 6%, respectively, as hydraulic fracturing and directional
drilling activity in US land accelerated. Reservoir Characterization
Group revenue increased 9% due to higher international activities beyond
the seasonal rebounds in the Russia & CIS and North Sea regions. Cameron
Group revenue also increased 3% sequentially driven by higher project
volume and product sales for Surface Systems and Valves & Measurement in
North America.

“While the activity outlook in North America for the second half of the
year remains robust, we are now also seeing more positive signs in the
international markets with increases in activity and new project plans
starting to emerge in several GeoMarkets. The strengthening in the
international markets has so far been concentrated around land activity
in Western Siberia and in the OPEC Gulf countries but we are now also
seeing an increasing number of new offshore projects being prepared for
tendering and final investment decision (FID) in many of the world’s
shallow water basins.

“In this market, we continue to focus on serving our customers and
driving our business forward, building on our successful efforts over
the past three years of broadening our technology portfolio and
increasing our addressable market, further streamlining our execution
machine, and pursuing more collaborative and commercially aligned ways
of working with new and existing customers.

“As part of this focus, we announced a new agreement yesterday to
acquire a majority equity interest in the Eurasia Drilling Company
(EDC). This extends the successful long-term relationship that we have
enjoyed with EDC through the strategic alliance that we signed in 2011.
Closing of the transaction is subject to approval by the Federal
Antimonopoly Service of Russia.

“We also remain on track to close the OneStimSM
joint venture
transaction in the second half of this year, which will allow us to
further capitalize on the recovery in North America land unconventional
activity. At the same time, our increasing investments in Schlumberger
Production Management through the new projects with OneLNG, YPF, and
NNPC and FIRST E&P are not only providing additional short-term
opportunities for our various product lines, but also a long-term
activity baseline with superior full-cycle financial returns for the
company as a whole.

“Based on these, we continue to be optimistic about the future of
Schlumberger, as we maintain an attentive watch and flexible approach to
the shape and pace of the emerging oil market recovery.”

Other Events

During the quarter, Schlumberger repurchased 5.5 million shares of its
common stock at an average price of $72.34 per share for a total
purchase price of $398 million.

On May 31, 2017, Schlumberger and Production Plus created a joint
venture to develop HEAL System™ technology and business. HEAL System
technology is designed to lower production costs by mitigating
production challenges commonly found in horizontal wells in
unconventional resource plays.

On June 29, 2017, Schlumberger, the Nigerian National Petroleum
Corporation (NNPC) and FIRST E&P signed an agreement for development of
the Anyala and Madu fields in offshore Nigeria. Under the agreement,
Schlumberger will contribute the required services in kind and capital
for the project development until first oil.

On July 19, 2017, the Company’s Board of Directors approved a quarterly
cash dividend of $0.50 per share of outstanding common stock, payable on
October 13, 2017 to stockholders of record on September 6, 2017.

On July 20, 2017, Schlumberger announced an agreement to acquire a
majority (51%) equity interest in EDC. Closing of the transaction is
subject to approval by the Federal Antimonopoly Service of Russia.

In North America, revenue grew 18% sequentially following the fast-track
deployment of idle capacity as unconventional land activity accelerated
during the quarter. US land revenue experienced 42% sequential growth, a
rate almost double that of the 23% growth in the US land rig count,
driven primarily by hydraulic fracturing revenue that grew 68% as
completion activity intensified and pricing continued to improve.
Directional drilling revenue in US land was also higher, as well design
and longer laterals requiring rotary steerable systems and drillbit
technologies continued to drive well productivity. Higher product sales
in Cameron Valves & Measurement and increased activity for Cameron
Surface Systems contributed to this strong financial performance. US
land revenue growth, however, was partially offset by the seasonal
spring break-up in Western Canada and lower offshore revenue.

International Areas

Revenue in the Latin America Area
increased 9% sequentially on a
strong performance in Mexico from the Reservoir Characterization and
Drilling Groups. Argentina revenue was also higher on increased
unconventional land activity while Brazil and Venezuela activity
remained weak. Ecuador revenue declined due to lower production from the
Schlumberger Production Management (SPM) Shushufindi project. The effect
of this, however, was largely offset by revenue from increased
exploration in Colombia.

Europe/CIS/AfricaArea
revenue increased 6%
sequentially as activity recovered following the winter slowdown in the
Russia & CIS and North Sea regions. Increased revenue in the Russia &
CIS region was driven by the start of offshore exploration drilling
campaigns in Sakhalin, Astrakhan, and Kazakhstan despite Russian
alignment with OPEC production cut commitments. The increased activity
in the North Sea resulted from higher UK and Norway drilling activity as
the rig count increased. Sub-Sahara Africa GeoMarket revenue was
essentially flat as rig count stabilized with a recovery on land and
early signs of customers preparing to resume activity on key offshore
projects.

Middle East & Asia Area
revenue increased 1% sequentially
primarily due to seasonal rebounds in SPM and completions activity in
China in addition to higher activity in Vietnam and Thailand. Iraq
revenue was also higher on increased IDS deviated well project delivery
in the south, while further progress on the early production facility
projects coupled with product sales drove revenue higher in Egypt. These
increases, however, were partially offset by a decline in revenue in
Kuwait following the completion of a WesternGeco land seismic
acquisition project and by lower revenue in India due to monsoon weather
affecting rig activity.

Reservoir Characterization Group

(Stated in millions)

Three Months Ended

Change

Jun. 30, 2017

Mar. 31, 2017

Jun. 30, 2016

Sequential

Year-on-year

Revenue

$1,759

$1,618

$1,586

9

%

11

%

Pretax operating income

$299

$281

$268

7

%

12

%

Pretax operating margin

17.0

%

17.3

%

16.9

%

-34 bps

13 bps

Reservoir Characterization Group revenue of $1.8 billion, of which 78%
came from the international markets, increased 9% sequentially due to
higher WesternGeco multiclient seismic license sales, further progress
for Testing & Process on early production facility projects in the
Middle East, and higher drillstem test activities in the United Arab
Emirates. Wireline revenue also grew from the seasonal activity rebound
in the Russia & CIS and North Sea regions, as well as from the start-up
of offshore exploration projects in the Sub-Sahara Africa GeoMarket.

Pretax operating margin of 17% was essentially flat sequentially as the
increased contribution from high-margin Wireline exploration activities
was offset by reduced profitability in Testing & Process due to
increased project costs.

Reservoir Characterization Group performance was enhanced by Integrated
Services Management (ISM) operations, where specially trained project
managers provide scheduling, planning, and activity coordination for the
Schlumberger product lines involved in a project. Second-quarter
performance was also boosted by new technology deployments and contract
awards.

In Vietnam, Idemitsu successfully drilled an exploration well
significantly under budget. For this project, Schlumberger was awarded
five contracts, and an ISM manager was assigned to coordinate all
Schlumberger services. The drilling and data acquisition program was
optimized to achieve the well objectives while minimizing the overall
costs of the exploration well. Drilling & Measurements StethoScope*
formation pressure-while-drilling service and EcoScope*†
multifunction logging-while-drilling service technologies for reservoir
evaluation were successfully run in the 12¼-in and 8½-in holes,
respectively. The close collaboration between Schlumberger and the
customer led to the completion of the well with no incidents.

Sirius Petroleum, an investment company focused on oil and gas
exploration and development opportunities in Nigeria, awarded
Schlumberger a multiwell contract for ISM operations in the Ororo field.
The contract, which will begin later in 2017, includes directional
drilling services, logging, completion and production fluids, cementing
and pumping services, well intervention and stimulation products and
services, well testing services, wellsite communications, data and
software solutions as well as Cameron wellheads and production trees.

Offshore Egypt, Testing & Process used a combination of technologies for
Belayim Petroleum Company (Petrobel) to complete a production test of
the first appraisal well on the Zohr discovery in the Shorouk block.
Working at a water depth of 1,450 m, the production test string included
SenTREE 3* subsea test tree and Muzic* wireless telemetry technology
that activated the SCAR* inline independent reservoir fluid sampling and
Quartet* downhole reservoir testing systems. Additional technologies
included a CERTIS* high-integrity reservoir test isolation system, IRDV*
intelligent remote dual valve, and Signature* quartz gauges. The use of
Testing Manager* well testing real-time data monitoring and
collaboration software enabled real-time transient analysis and
optimization of the well test program.

In Oman, Schlumberger deployed a combination of technologies for
Petroleum Development Oman (PDO) to enhance productivity in seven wells
in the Sadad North field. The technologies included a QUANTUM RH*
retrievable hydraulic-set sealbore production packer and Testing &
Process SXAR automatic gun release systems to create an integrated
“shoot and drop” completions operation that could be deployed in a
single trip. QUANTUM RH packer technology absorbs the high shock
produced during perforation operations while enabling easy recovery. The
customer increased production by an average of 200 m3
/d of
oil per well and saved a total of $700,000 in associated well costs for
all seven wells.

Offshore India, Wireline deployed a combination of technologies to
increase production and reduce water cut in a well for Oil and Natural
Gas Corporation Limited (ONGC). Data collected using the PLT* production
logging tool and PressureXpress* reservoir pressure while logging
service helped design the optimal workover program. As a result, the
customer increased production to 6,100 bbl/d from the original 892 bbl/d
and decreased the water cut to 2% from the original 7.7%.

In Kuwait, Wireline used a Saturn* 3D radial probe for Kuwait Oil
Company in one exploration well in an extremely tight cretaceous
carbonate reservoir. Saturn probe technology positions self-sealing
ports against the borehole wall to optimally draw reservoir fluids. The
customer saved 14 days of rig time, equivalent to $672,000.

In Russia, Software Integrated Solutions (SIS) entered a technology
partnership agreement with the Gazpromneft Scientific Technology Centre
to provide Guru* in-context guidance and support software in the Petrel*
E&P software platform. The software enables discipline experts to
collaborate and make the best possible decisions from exploration to
production. The customer benefits from a standard 3D-modeling process
that provides a 90% time saving compared with a conventional workflow.

In Norway, Aker BP ASA entered into a four-year framework contract with
two optional two-year extensions with Schlumberger for acquisition of 4D
seismic data over Alvheim, Bøyla, Skarv/Snadd, and Ula fields in the
Norwegian sector of the North Sea. The survey will be conducted in 2017
and use IsoMetrix* marine isometric seismic technology. Processing of
the 4D and 3D data from the Alvheim and Skarv surveys will be carried
out at the WesternGeco Stavanger Geosolutions center.

WesternGeco was awarded multiple offshore seismic survey contracts for
the provision of Q-Marine* point-receiver marine seismic technology with
the CLA* continuous line acquisition method. Repsol Exploracion Guyana,
S.A. awarded WesternGeco a 4,000-km2 survey offshore Guyana near recent
major oil discoveries. In addition, Tullow awarded WesternGeco two
contracts—one for a 2,150-km2 3D survey offshore Guyana and the second
for data processing of a recently acquired dataset in Uruguay. The
Uruguay data will be processed in the WesternGeco Gatwick Geosolutions
center using prestack depth migration and a broadband processing flow.

BP awarded WesternGeco the data processing and imaging of a
state-of-the-art, ultrahigh-density ocean-bottom survey to be acquired
over the Clair Ridge Field, West of Shetland in the UK. The survey will
become the baseline for future 4D time-lapse studies of the area and
includes advanced velocity model building and multicomponent processing
and imaging technologies.

Drilling Group

(Stated in millions)

Three Months Ended

Change

Jun. 30, 2017

Mar. 31, 2017

Jun. 30, 2016

Sequential

Year-on-year

Revenue

$2,107

$1,985

$2,034

6

%

4

%

Pretax operating income

$302

$229

$171

32

%

77

%

Pretax operating margin

14.3

%

11.5

%

8.4

%

278 bps

594 bps

Drilling Group revenue of $2.1 billion, of which 74% came from the
international markets, increased 6% sequentially, due to the seasonal
rebound in activity in the Russia & CIS and North Sea regions and strong
directional drilling activity in US land that benefited most of the
Drilling Group product lines. The demand for directional drilling
technologies in US land was also higher, as well design and longer
laterals required advanced rotary steerable systems and innovative
drillbit technologies to drive well productivity. These increases were
partially offset by the seasonal spring-break up in Western Canada and
lower offshore activity in the US Gulf of Mexico.

Pretax operating margin of 14% increased 278 basis points (bps)
sequentially due to increased volume and pricing improvements from the
greater uptake of Drilling & Measurements and Bits & Drilling Tools
technologies in US land, although this was partially offset by pricing
pressure in the US Gulf of Mexico and in the international markets.

Drilling Group performance in the second quarter was strengthened by a
combination of IDS operations, which provide project management,
engineering design, and technical optimization capabilities. Group
performance was also boosted by new technology deployments and contract
awards.

In Russia, LUKOIL awarded Schlumberger a three-year IDS contract for 139
wells in Western Siberia. The scope of work includes technologies and
services from Drilling & Measurements, Bits & Drilling Tools, M-I SWACO,
Completions, and SIS.

In Oman, Petrogas Kahil awarded Schlumberger an IDS contract for one
year valued at $20 million to drill three exploration wells in Block 55.
This includes the provision of several Schlumberger technologies, such
as Bits & Drilling Tools AxeBlade* ridged diamond element bits, Drilling
& Measurements PowerV* vertical drilling rotary steerable systems, and
Surface Systems SOLIDrill* modular compact wellhead systems. Operations
for the first well began in the second quarter of 2017.

In Bahrain, IDS was awarded a contract for two offshore exploration
wells with a six-month optional extension by the Bahrain Petroleum
Company (BAPCO). The contract includes products and services from the
Reservoir Characterization, Drilling, Production, and Cameron Groups. A
number of technologies are included in the contract, such as the
PowerDrive vorteX* powered rotary steerable system, GeoFlex*
quantitative cuttings analysis and imaging service, FlexSTIM* modular
offshore stimulation system, and CERTIS* high-integrity reservoir test
isolation system. Operations began in the first quarter of 2017.

SCS Corporation Ltd., a subsidiary of Hyperdynamics Corporation, awarded
Schlumberger a drilling master services contract for the Fatala-1
deepwater exploration well offshore the Republic of Guinea. The contract
includes wireline logging, measurement- and logging-while-drilling,
drilling fluids and solids control, downhole cementing, mud logging,
drillbits and reamers, as well as contingency fishing equipment and
services. Schlumberger will also provide an IDS project manager and
drilling will begin in the third quarter of 2017.

In the US Gulf of Mexico, the Drilling Group used a combination of
technologies for Shell to optimize drilling of a challenging salt
formation in the Green Canyon Block. Drilling through salt creates very
high torque levels and fluctuations that can lead to low rates of
penetration (ROP) or tool failures. The technologies included a Drilling
& Measurements PowerDrive Orbit* rotary steerable system and a Bits &
Drilling Tools AxeBlade ridge diamond element bit. As a result, the
customer was the first to drill more than 5,353 ft in a 24-hour period
in the Gulf of Mexico and was able to save seven days of drilling time
in the 16½-in section.

In Oklahoma, Drilling & Measurements used PeriScope HD* multilayer bed
boundary detection service for Casillas Petroleum Corporation to
minimize risk and optimize drilling performance in the SCOOP plays. With
its ability to detect multiple formation layers and fluid boundary
positions, PeriScope HD service enabled advanced well placement by
providing real-time reservoir delineation in a formation that showed
little contrast from top to bottom. As a result, the customer was able
to place 100% of the lateral in zone, avoiding potential lost-in-hole
and sidetrack costs.

In the UK sector of the North Sea, Drilling & Measurements deployed a
combination of technologies for a major operator to improve drilling
performance in challenging well conditions. The combination of
OptiDrill* real-time drilling intelligence service and PowerDrive Xceed*
rotary steerable system optimized technology performance by reducing the
number of bit runs from five to one. This saved the customer
approximately 10 days of drilling time, equivalent to more than $2.4
million.

In North America land, Bits & Drilling Tools used AxeBlade ridged
diamond element bit technology in four wells for a customer to overcome
drilling challenges in the Bakken Shale play. The formation is
characterized by heavily interbedded sandstone, shale, and limestone
intervals with varying compressive strengths that can limit drilling
performance. The customer saved 52 hours between four wells. In
addition, AxeBlade bit technology exceeded the customer’s 24-hour
footage record twice over the same interval.

In Colombia, Bits & Drilling Tools used ONYX 360* rolling
polycrystalline diamond compact (PDC) cutter technology to overcome
drilling challenges for Equion Energy in the Llanos basin. ONYX 360
cutter technology provided increased bit durability while drilling
through three different compressive strength formations. The ROP was 3.5
times higher compared with offset runs in the same formations. The
customer saved nearly $3 million in operating costs.

In China, Bits & Drilling Tools used a combination of technologies for
PetroChina to drill a 9½-in curved interbedded sandstone and shale well
section in the Halahatang field. This challenging geology typically
requires two to three conventional drillbits to reach target depth under
severe shock and vibration. A combination of RockStorm* wear-resistant
high-impact PDC cutter technology and Stinger* conical diamond element
technology drilled to total depth in a single run. This saved the
customer 10 days of drilling operations, equivalent to $150,000.

In Norway, M-I SWACO deployed ATC* automated tank-cleaning technology
for Statoil to reduce health, safety, and environmental risks on supply
vessels. Average monthly performance, based on 25 boats and 150 tanks,
reduced confined-space entry by more than 500 hours per month and
reduced working at height by 225 hours per month. In addition, ATC
tank-cleaning technology decreased water usage by 80% per month while
also achieving a higher level of cleaning compared with a manual
process. Consequently, the customer has saved approximately $500,000 per
month since the technology was adopted in April 2016.

Production Group

(Stated in millions)

Three Months Ended

Change

Jun. 30, 2017

Mar. 31, 2017

Jun. 30, 2016

Sequential

Year-on-year

Revenue

$2,496

$2,187

$2,121

14

%

18

%

Pretax operating income

$221

$110

$82

101

%

170

%

Pretax operating margin

8.9

%

5.0

%

3.9

%

382 bps

499 bps

Production Group revenue of $2.5 billion, of which 59% came from the
international markets, was 14% higher sequentially due primarily to
strong hydraulic fracturing activity and a sustained pricing recovery in
North America land as completions activity intensified and stage counts
increased by 26%. In US land, hydraulic fracturing revenue grew 68%
through the fast-track deployment of idle capacity as unconventional
land activity accelerated during the quarter. International revenue was
also higher on the seasonal activity rebound in China and in the Russia
& CIS region, while revenue in Argentina increased on unconventional
land activity. SPM posted a sequential increase from the seasonal
recovery in China, although this was partially offset by the decline in
revenue in Ecuador due to lower production from the SPM Shushufindi
project.

Pretax operating margin of 9% increased 382 bps sequentially due to
increased activity and pricing recovery on land in North America.
Despite the significant costs incurred in reactivating multiple fleets
in the second quarter, the hydraulic fracturing business in North
America was profitable for the first time since the first quarter of
2015. Margin also expanded due to increasing benefits from the vertical
integration of the pressure pumping business.

Production Group results benefited from a series of new technology
deployments and transformation initiatives.

In North America land, Well Services used BroadBand Sequence* fracturing
service to increase production in a horizontal shale well in the
heterogeneous Wolfcamp Shale formation in the Permian basin. Nearly one
year after deploying the BroadBand* service, the well produced 42% more
hydrocarbons compared with the average production of three offset wells
with the same lateral length, stage count, and volume of proppant and
fluids.

In West Texas, Schlumberger used a combination of technologies for Manti
Tarka Permian to optimize well completions in the Wolfcamp Shale
formation. The technologies included Kinetix Shale* reservoir-centric
stimulation-to-production software, Wireline ThruBit* through-the-bit
logging services, and Sonic Scanner* acoustic scanning platform. Data
from field measurements and modeling helped to optimize the completions
design, leading to a 60% increase in the hydraulic fracturing surface
area. The customer achieved a 25% improvement in oil production compared
with offset wells in the field.

In North America land, Schlumberger artificial lift technology
established a new equipment benchmark in shale oil operations. REDA
Continuum* unconventional extended-life electrical submersible pump
(ESP) technology, which is designed for unconventional reservoir
horizontal well challenges such as slug fluid flow and damaging solids,
exceeds the reliability of conventional ESPs. Continuum ESP technology
has been installed in more than 180 operations since its introduction in
September 2014 and has demonstrated run lives of 18 months, surpassing
historical averages of six to nine months.

In China, Well Services deployed a combination of technologies to
increase production for PetroChina Company Limited in two horizontal gas
wells in a tight sandstone formation in the Ordos basin. The use of
Salik* local-sand-enabled flow-channel fracturing service enabled
replacement of more than half of the ceramic proppant normally required,
and helped create high conductivity fractures in the horizontal lateral.
As a result of these combined technologies, the customer achieved a 50%
increase in gas production in each well versus plan. In addition, Salik
fracturing service helped reduce overall well costs by 20%, equivalent
to $95,000.

In North America, the transformation program enabled improved equipment
reliability and reduced maintenance costs. In particular, the Center for
Reliability and Efficiency in Denton, Texas, supports the field by
monitoring equipment fleets from its Reliability Support Center, where
prognostic health monitoring capabilities (PHM) have been developed to
predict equipment reliability concerns. PHM has saved $10 million in
operation costs over the last 18 months.

Cameron Group

(Stated in millions)

Three Months Ended

Change

Jun. 30, 2017

Mar. 31, 2017

Jun. 30, 2016

Sequential

Year-on-year

Revenue

$1,265

$1,229

$1,525

3

%

-17

%

Pretax operating income

$174

$162

$250

8

%

-30

%

Pretax operating margin

13.8

%

13.2

%

16.4

%

61 bps

-260 bps

Cameron Group revenue of $1.3 billion, of which 59% came from
International markets, increased 3% sequentially, driven by Surface
Systems and Valves & Measurement activity in US land, which grew at the
same rate as the well count. The US land growth, however, was partially
offset by reduced US Gulf of Mexico activity for Drilling Systems and
OneSubsea. Internationally, revenues declined slightly due to reduced
project activity for OneSubsea and Drilling Systems, offset in part by
higher revenue in Surface Systems and Valves & Measurement from the
seasonal service activity rebound in the Russia & CIS region.

Pretax operating margin of 14% slightly improved sequentially, as
increased project volumes and product sales in Surface Systems and
Valves & Measurement and continued strong project execution in OneSubsea
more than offset the impact of falling product backlog in Drilling
Systems.

Cameron Group performance included the following highlights during the
quarter.

Cameron Drilling Systems and M-I SWACO collaborated on product
development to deliver the industry’s first original equipment
manufacturer deepwater managed pressure drilling (MPD) system. The
integrated solution is comprised of a riser joint, surface manifolds, a
single control system and umbilical, and other equipment. To date,
Schlumberger has received orders for four of the systems—the first was
delivered in May 2017 and the other three will be delivered later this
year. This deepwater MPD system received a 2017 Offshore Technology
Conference Spotlight on New Technology Award.

TAQA awarded OneSubsea an engineering, procurement, construction,
installation and commissioning (EPCIC) contract for the Otter field in
the UK sector of the North Sea. The contract includes a subsea
multiphase boosting system with topside and subsea controls and
associated life-of-field services. The project will result in a 30-km
subsea tieback to the TAQA-operated North Cormorant platform and will be
the longest subsea multiphase boosting tieback in the UK sector of the
North Sea. OneSubsea and its Subsea Integration Alliance partner, Subsea
7, will deliver a turnkey integrated project from design through supply,
installation, and commissioning.

Noble Energy Mediterranean Ltd. awarded Schlumberger a contract for the
provision of a measurement and control system for the deepwater
Leviathan Field Development Project offshore Israel. The Valves &
Measurement system will include two large, multirun metering skids,
Caldon gas and liquid ultrasonic custody transfer meters, a
bidirectional prover, and a building to house multiple natural gas
component analyzers and supervisory control systems.

In the US Gulf of Mexico, OneSubsea and its Subsea Services Alliance
member, Helix Energy Solutions, received an expression of interest for
rental of the jointly developed 15,000 psi Intervention Riser System,
starting in the fourth quarter of 2017. This system, in which the
construction was launched mid-2015, will be the first of its kind
available on a rental basis to address the growing intervention needs of
high-pressure subsea wells.

Financial Tables

Condensed Consolidated Statement of Income (Loss)

(Stated in millions, except per share amounts)

Second Quarter

Six Months

Periods Ended June 30,

2017

2016

2017

2016

Revenue

$7,462

$7,164

$14,356

$13,684

Interest and other income

62

54

108

98

Expenses

Cost of revenue (1)

6,468

6,465

12,544

11,925

Research & engineering

196

257

406

497

General & administrative

110

103

208

213

Impairments & other (1)

510

2,573

510

2,573

Merger & integration (1)

81

185

164

185

Interest

142

149

281

282

Income (loss) before taxes

$17

$(2,514

)

$351

$(1,893

)

Taxes on income (loss) (1)

98

(368

)

148

(270

)

Net income (loss)

$(81

)

$(2,146

)

$203

$(1,623

)

Net income (loss) attributable to noncontrolling interests

(7

)

14

(2

)

36

Net income (loss) attributable to Schlumberger (1)

$(74

)

$(2,160

)

$205

$(1,659

)

Diluted earnings (loss) per share of Schlumberger (1)

$(0.05

)

$(1.56

)

$0.15

$(1.26

)

Average shares outstanding

1,387

1,389

1,390

1,321

Average shares outstanding assuming dilution

1,387

1,389

1,397

1,321

Depreciation & amortization included in expenses (2)

$986

$1,113

$1,975

$2,080

(1)
See section entitled “Charges & Credits” for details.

(2)
Includes depreciation of property, plant and equipment
and amortization of intangible assets, multiclient seismic data costs
and SPM investments.

Condensed Consolidated Balance Sheet

(Stated in millions)

Jun. 30,

Dec. 31,

Assets

2017

2016

Current Assets

Cash and short-term investments

$6,218

$9,257

Receivables

8,925

9,387

Other current assets

6,130

5,283

21,273

23,927

Fixed income investments, held to maturity

13

238

Fixed assets

12,358

12,821

Multiclient seismic data

1,042

1,073

Goodwill

25,058

24,990

Intangible assets

9,636

9,855

Other assets

5,482

5,052

$74,862

$77,956

Liabilities and Equity

Current Liabilities

Accounts payable and accrued liabilities

$9,444

$10,016

Estimated liability for taxes on income

1,159

1,188

Short-term borrowings and current portion

of long-term debt

2,224

3,153

Dividends payable

700

702

13,527

15,059

Long-term debt

16,600

16,463

Deferred taxes

2,000

1,880

Postretirement benefits

1,385

1,495

Other liabilities

1,398

1,530

34,910

36,427

Equity

39,952

41,529

$74,862

$77,956

Liquidity

(Stated in millions)

Components of Liquidity

Jun. 30, 2017

Mar. 31,
2017

Dec. 31,
2016

Jun. 30,
2016

Cash and short-term investments

$6,218

$7,353

$9,257

$11,192

Fixed income investments, held to maturity

13

238

238

386

Short-term borrowings and current portion of long-term debt

(2,224

)

(2,449

)

(3,153

)

(3,371

)

Long-term debt

(16,600

)

(16,538

)

(16,463

)

(18,252

)

Net Debt (1)

$(12,593

)

$(11,396

)

$(10,121

)

$(10,045

)

Details of changes in liquidity follow:

Six

Second

Six

Months

Quarter

Months

Periods Ended June 30,

2017

2017

2016

Net income (loss) before noncontrolling interests

$203

$(81

)

$(1,623

)

Impairment and other charges, net of tax before noncontrolling
interests

“Net Debt” represents gross debt less cash, short-term investments
and fixed income investments, held to maturity. Management believes
that Net Debt provides useful information regarding the level of
Schlumberger’s indebtedness by reflecting cash and investments that
could be used to repay debt. Net Debt is a non-GAAP financial
measure that should be considered in addition to, not as a
substitute for or superior to, total debt.

(2)

Includes depreciation of property, plant and equipment and
amortization of intangible assets, multiclient seismic data costs
and SPM investments.

(3)

Includes severance payments of approximately $230 million and $90
million during the six months and second quarter ended June 30,
2017, respectively; and $545 million during the six months ended
June 30, 2016. The six months ended June 30, 2016 also includes
approximately $100 million of one-off transaction-related payments
associated with the acquisition of Cameron.

(4)

“Free cash flow” represents cash flow from operations less capital
expenditures, SPM investments and multiclient seismic data costs
capitalized. Management believes that free cash flow is an important
liquidity measure for the company and that it is useful to investors
and management as a measure of our ability to generate cash. Once
business needs and obligations are met, this cash can be used to
reinvest in the company for future growth or to return to
shareholders through dividend payments or share repurchases. Free
cash flow does not represent the residual cash flow available for
discretionary expenditures. Free cash flow is a non-GAAP financial
measure that should be considered in addition to not as substitute
for or superior to, cash flow from operations.

Charges & Credits

In addition to financial results determined in accordance with US
generally accepted accounting principles (GAAP), this Second-Quarter
2017 Earnings Release also includes non-GAAP financial measures (as
defined under the SEC’s Regulation G). Net income, excluding charges &
credits, as well as measures derived from it (including diluted EPS,
excluding charges & credits; net income before noncontrolling interests,
excluding charges & credits; and effective tax rate, excluding charges &
credits) are non-GAAP financial measures. Management believes that the
exclusion of charges & credits from these financial measures enables it
to evaluate more effectively Schlumberger’s operations period over
period and to identify operating trends that could otherwise be masked
by the excluded items. These measures are also used by management as
performance measures in determining certain incentive compensation. The
foregoing non-GAAP financial measures should be considered in addition
to, not as a substitute for or superior to, other measures of financial
performance prepared in accordance with GAAP. The following is a
reconciliation of these non-GAAP measures to the comparable GAAP
measures.

(1)
Recorded in Cost of revenue
in the Condensed
Consolidation Statement of Income (Loss).

* Does not add due to rounding

Product Groups

(Stated in millions)

Three Months Ended

Jun. 30, 2017

Mar. 31, 2017

Jun. 30, 2016

Revenue

Income Before Taxes

Revenue

Income
Before
Taxes

Revenue

Income
Before
Taxes

Reservoir Characterization

$1,759

$299

$1,618

$281

$1,586

$268

Drilling

2,107

302

1,985

229

2,034

171

Production

2,496

221

2,187

110

2,121

82

Cameron

1,265

174

1,229

162

1,525

250

Eliminations & other

(165

)

(46

)

(125

)

(25

)

(102

)

(24

)

Pretax operating income

950

757

747

Corporate & other

(242

)

(239

)

(241

)

Interest income(1)

28

24

24

Interest expense(1)

(128

)

(126

)

(136

)

Charges & credits

(591

)

(82

)

(2,908

)

$7,462

$17

$6,894

$334

$7,164

$(2,514

)

(Stated in millions)

Six Months Ended

Jun. 30, 2017

Jun. 30, 2016

Revenue

Income Before Taxes

Revenue

Income
Before
Taxes

Reservoir Characterization

$3,377

$580

$3,305

$601

Drilling

4,092

531

4,527

542

Production

4,683

331

4,497

288

Cameron

2,494

336

1,525

250

Eliminations & other

(290

)

(71

)

(170

)

(33

)

Pretax operating income

1,707

1,648

Corporate & other

(480

)

(414

)

Interest income(1)

52

37

Interest expense(1)

(254

)

(256

)

Charges & credits

(674

)

(2,908

)

$14,356

$351

$13,684

$(1,893

)

(1)
Excludes interest included in the Product Groups
results.

Certain prior period items have been reclassified to conform to
the current period presentation.

Supplemental Information

1)

What is the capex guidance for the full year 2017?

Capex (excluding multiclient and SPM investments) is expected to be
$2.2 billion for 2017.

2)

What was the cash flow from operations for the second quarter
of 2017?

Cash flow from operations for the second quarter of 2017 was $858
million and included approximately $90 million of severance payments.

3)

What was the cash flow from operations for the first half of
2017?

Cash flow from operations for the first half of 2017 was $1.5
billion and included approximately $230 million of severance
payments.

4)

What was included in “Interest and other income” for the second
quarter of 2017?

“Interest and other income” for the second quarter of 2017 was $62
million. This amount consisted of earnings of equity method
investments of $28 million and interest income of $34 million.

5)

How did interest income and interest expense change during the
second quarter of 2017?

Interest income of $34 million was $5 million higher sequentially.
Interest expense of $142 million was $3 million higher sequentially.

6)

What is the difference between pretax operating income and
Schlumberger’s consolidated income before taxes?

The difference principally consists of corporate items (including
charges and credits) and interest income and interest expense not
allocated to the segments as well as stock-based compensation
expense, amortization expense associated with certain intangible
assets (including intangible asset amortization expense resulting
from the acquisition of Cameron), certain centrally managed
initiatives, and other nonoperating items.

7)

What was the effective tax rate (ETR) for the second quarter of
2017?

The ETR for the second quarter of 2017, calculated in accordance
with GAAP, was 590% as compared to 14.8% for the first quarter of
2017. The ETR for the second quarter of 2017, excluding charges
and credits, was 18.9% as compared to 15.3% for the first quarter
of 2017.

8)

How many shares of common stock were outstanding as of June 30,
2017 and how did this change from the end of the previous quarter?

There were 1.385 billion shares of common stock outstanding as of
June 30, 2017. The following table shows the change in the number of
shares outstanding from March 31, 2017 to June 30, 2017.

(Stated in millions)

Shares outstanding at March 31, 2017

1,389

Shares sold to optionees, less shares exchanged

-

Vesting of restricted stock

1

Shares issued under employee stock purchase plan

-

Stock repurchase program

(5)

Shares outstanding at June 30, 2017

1,385

9)

What was the weighted average number of shares outstanding
during the second quarter of 2017 and first quarter of 2017 and
how does this reconcile to the average number of shares
outstanding, assuming dilution used in the calculation of diluted
earnings per share, excluding charges and credits?

The weighted average number of shares outstanding during the second
quarter of 2017 was 1.387 billion and 1.393 billion during the first
quarter of 2017.

The following is a reconciliation of the weighted average shares
outstanding to the average number of shares outstanding, assuming
dilution, used in the calculation of diluted earnings per share,
excluding charges and credits.

(Stated in millions)

Second Quarter 2017

First Quarter
2017

Weighted average shares outstanding

1,387

1,393

Assumed exercise of stock options

1

4

Unvested restricted stock

5

5

Average shares outstanding, assuming dilution

1,393

1,402

10)

What was the unamortized balance of Schlumberger’s investment
in SPM projects at June 30, 2017 and how did it change as compared
to December 31, 2016?

The unamortized balance of Schlumberger’s investments in SPM
projects was approximately $2.6 billion and $2.5 billion at June 30,
2017 and December 31, 2016, respectively. These amounts are included
within Other Assets in Schlumberger’s Condensed Consolidated Balance
Sheet. The change in the unamortized balance of Schlumberger’s
investment in SPM projects was as follows:

(Stated in millions)

Balance at December 31, 2016

$2,458

SPM investments

328

Amortization of SPM investment

(213

)

Balance at June 30, 2017

$2,573

11)

What was the amount of WesternGeco multiclient sales in the
second quarter of 2017?

Multiclient sales, including transfer fees, were $182 million in the
second quarter of 2017 and $138 million in the first quarter of 2017.

12)

What was the WesternGeco backlog at the end of the second
quarter of 2017?

WesternGeco backlog, which is based on signed contracts with
customers, was $566 million at the end of the second quarter of
2017. It was $613 million at the end of the first quarter of 2017.

13)

What were the orders and backlogs for Cameron Group’s OneSubsea
and Drilling Systems businesses?

OneSubsea and Drilling Systems orders and backlogs were as follows:

(Stated in millions)

Orders

Second Quarter

2017

First Quarter

2017

OneSubsea

$181

$546

Drilling Systems

$170

$174

Backlog
(at the end of period)

OneSubsea

$2,371

$2,634

Drilling Systems

$566

$608

14)

What is included in Impairments & other on Schlumberger’s
Condensed Consolidated Statement of Income (Loss) for the second
quarter of 2017?

During the second quarter of 2017, Schlumberger recorded $510
million of pretax charges that are classified in Impairments &
other. The vast majority of this amount relates to a financing
agreement that Schlumberger entered into with its primary customer
in Venezuela. This agreement resulted in the exchange of $700
million of outstanding accounts receivable for an interest bearing
promissory note. Schlumberger recorded this note at its estimated
fair value on the date of exchange, which resulted in a charge.

About Schlumberger

Schlumberger is the world's leading provider of technology for reservoir
characterization, drilling, production, and processing to the oil and
gas industry. Working in more than 85 countries and employing
approximately 100,000 people who represent over 140 nationalities,
Schlumberger supplies the industry's most comprehensive range of
products and services, from exploration through production, and
integrated pore-to-pipeline solutions that optimize hydrocarbon recovery
to deliver reservoir performance.

Schlumberger Limited has principal offices in Paris, Houston, London and
The Hague, and reported revenues of $27.81 billion in 2016. For more
information, visit www.slb.com
.

*Mark of Schlumberger or of Schlumberger companies.

†
Japan Oil, Gas and Metals National Corporation (JOGMEC),
formerly Japan National Oil Corporation (JNOC), and Schlumberger
collaborated on a research project to develop logging while drilling
(LWD) technology that reduces the need for traditional chemical sources.
Designed around the pulsed neutron generator (PNG), EcoScope service
uses technology that resulted from this collaboration. The PNG and the
comprehensive suite of measurements in a single collar are key
components of the EcoScope service that deliver game-changing LWD
technology.

Notes

Schlumberger will hold a conference call to discuss the earnings press
release and business outlook on Friday, July 21, 2017. The call is
scheduled to begin at 8:30 a.m. US Eastern Time. To access the call,
which is open to the public, please contact the conference call operator
at +1 (800) 288-8967 within North America, or +1 (612) 333-4911 outside
North America, approximately 10 minutes prior to the call’s scheduled
start time. Ask for the “Schlumberger Earnings Conference Call.” At the
conclusion of the conference call an audio replay will be available
until August 21, 2017 by dialing +1 (800) 475-6701 within North America,
or +1 (320) 365-3844 outside North America, and providing the access
code 423510.

The conference call will be webcast simultaneously at www.slb.com/irwebcast
on a listen-only basis. A replay of the webcast will also be available
at the same web site until August 31, 2017.

This second-quarter 2017 earnings release, as well as other statements
we make, contain “forward-looking statements” within the meaning of the
federal securities laws, which include any statements that are not
historical facts, such as our forecasts or expectations regarding
business outlook; growth for Schlumberger as a whole and for each of its
segments (and for specified products or geographic areas within each
segment); oil and natural gas demand and production growth; oil and
natural gas prices; improvements in operating procedures and technology,
including our transformation program; capital expenditures by
Schlumberger and the oil and gas industry; the business strategies of
Schlumberger’s customers; the anticipated benefits of the Cameron
transaction; the success of Schlumberger’s joint ventures and alliances;
future global economic conditions; and future results of operations.
These statements are subject to risks and uncertainties, including, but
not limited to, global economic conditions; changes in exploration and
production spending by Schlumberger’s customers and changes in the level
of oil and natural gas exploration and development; general economic,
political and business conditions in key regions of the world; foreign
currency risk; pricing pressure; weather and seasonal factors;
operational modifications, delays or cancellations; production declines;
changes in government regulations and regulatory requirements, including
those related to offshore oil and gas exploration, radioactive sources,
explosives, chemicals, hydraulic fracturing services and climate-related
initiatives; the inability of technology to meet new challenges in
exploration; the inability to integrate the Cameron business and to
realize expected synergies; the inability to retain key employees; and
other risks and uncertainties detailed in this second-quarter 2017
earnings release and our most recent Forms 10-K, 10-Q, and 8-K filed
with or furnished to the Securities and Exchange Commission. If one or
more of these or other risks or uncertainties materialize (or the
consequences of any such development changes), or should our underlying
assumptions prove incorrect, actual outcomes may vary materially from
those reflected in our forward-looking statements. Schlumberger
disclaims any intention or obligation to update publicly or revise such
statements, whether as a result of new information, future events or
otherwise.